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Summary

In a nearly unanimous decision, the U.S. Senate passed the Food and Drug Administration Safety and Innovation Act on May 24, 2012. The bill would reauthorize the drug and device user fee programs and, for the first time, allow the Food and Drug Administration (FDA) to collect user fees from generic drug and biosimilar manufacturers. The bill is expected to raise $6.4 billion over the next five years to cover a portion of the costs of the FDA’s review of medical product marketing applications. In addition, the bill would implement a number of changes to the FDA’s review and oversight of drugs, devices and biologicals. The House of Representatives is expected to take up consideration of a similar House bill this week.

In Depth

After months of negotiations, on May 24, 2012, the U.S. Senate passed the Food and Drug Administration Safety and Innovation Act, a bipartisan bill that would reauthorize the Food and Drug Administration (FDA) drug and medical device “user fee” programs and, for the first time, allow the agency to collect user fees from generic drug and biosimilar manufacturers. The bill, which passed by a vote of 96-1, is expected to raise $6.4 billion for the FDA over the next five years, which will be used to cover a portion of the costs associated with the agency’s review of marketing applications for the above-referenced products.

In addition to the user fee authorizations/reauthorizations, the bill proposes a number of changes to the agency’s oversight of drugs, medical devices and biologicals. Specifically, the bill would:

Allow the FDA to change the classification of a device by administrative order. Such changes—which are currently made only through regulation—must be proposed by the Director of the Center for Devices and Radiological Health (CDRH) and issued by the Commissioner.

Expressly require the FDA to extend its “Sentinel” post-market risk identification and analysis system to include medical devices. To ensure effective implementation, the FDA would be required to engage outside stakeholders through a public hearing, advisory committee meeting, public docket or similar public measure.

Require the FDA to issue proposed regulations establishing a unique device identification (UDI) system by December 31, 2012. The FDA would be required to finalize the regulations within six months of the close of the comment period on the proposed rule, and to implement the regulations for implantable, life-saving and life-sustaining devices within two years of the UDI regulations being finalized. The legislation aims to speed up the process of implementing UDI regulations, which have been under development at the FDA for some time.

For medical devices, require the FDA to provide a “substantive summary of the scientific and regulatory rationale” for decisions to deny clearance of a premarket clearance submission under section 510(k) of the Federal Food, Drug, and Cosmetic Act (FDCA), to deny approval of a premarket approval application or to disapprove of an investigational device exemption application to conduct a clinical trial. In addition, applicants who receive a negative response on one of the above-referenced applications will be permitted to request a supervisory review of the decision to deny clearance or approval (i.e., review by an individual “at the organizational level above the organization level at which the decision to deny the clearance of the report or approval of the application is made”) within 30 days of receiving such response.

Permit the FDA to classify a new medical device without predicates directly through de novo review into Class I or II without first requiring a “not substantially equivalent” determination under the 510(k) clearance process. The FDA may refuse to consider such a request, however, if it identifies a legally marketed device that could provide a reasonable basis for review of a substantially equivalent determination; if it determines the device is not of low-moderate risk; or if it determines “general controls” would be inadequate to control risk and “special controls” to mitigate risks cannot be developed for the proposed device.

Prohibit the FDA from releasing final guidance on medical mobile applications until the FDA drafts a report that “contains a proposed strategy and recommendations on an appropriate, risk-based regulatory framework pertaining to medical device regulation and health information technology software, including mobile applications,” and convenes a working group to provide input on the contents of the report. The bill would require the FDA to submit this report to Congress no later than 18 months after the date of the bill’s enactment. The FDA had issued a draft guidance establishing a risk-based model for how it would regulate mobile medical applications, and the legislation would require the FDA to issue a report to explain the FDA’s approach after convening a working group that would include a variety of external stakeholders. While many application developers welcome a comprehensive, consistent and risk-based approach and the involvement of external stakeholders in the development of mobile medical application policy, there is some concern on the part of the developers (and the FDA) about a process that would delay providing the industry with regulatory clarity on the use of innovative and important medical mobile applications.

Require the FDA to withdraw its draft “Guidance for Industry and Staff – 510(k) Device Modifications: Deciding When to Submit a 510(k) for a Change to an Existing Device.” The draft guidance, which was released in July 2011, has been heavily criticized by the device industry, with one reported estimate that the new guidance will increase the number of devices subject to the 510(k) clearance process anywhere from 300 percent to 500 percent. Consistent with this concern, during a March 2012 congressional hearing, CDRH Director, Dr. Jeffrey Shuren, noted that implementation of the draft guidance may lead to some unintended consequences and indicated the FDA intends to rework the guidance document. In addition to requiring the withdrawal of the draft guidance, the bill would require the FDA to ensure affected stakeholders are provided with an opportunity to comment on any future guidance before the document is made final.

Expand the information required of domestic and foreign facilities that manufacture, prepare, propagate, compound or process FDA-regulated products. Domestic and foreign drug establishments would be required to report their unique facility identifier, a point of contact’s e-mail address and information about each drug importer that takes physical possession of the drug (among other information). Foreign device facilities would be required to submit their name and place of business, the name of the U.S. agent for the facility, place of business and the name of each person who imports or offers to import such device into the United States. The bill authorizes the FDA to “specify the unique facility identifier system.”

Require the FDA to carry out drug facility inspections according to a risk-based schedule. Factors that the FDA would be required to consider in assessing risk include the compliance history of the establishment, the record, history and nature of recalls linked to the establishment, and the inherent risk associated with the drug manufactured, prepared, propagated, compounded or processed at the establishment, among others.

Allow the FDA to require establishments and wholesale drug distributors to notify the FDA of “substantial loss or theft” of drug, or if a drug has been or is being counterfeited and is in commerce in the United States or offered for import into the United States. These notifications must be made “in a reasonable time, in such reasonable manner, and by such reasonable means as the [FDA] may require.”

Enhance penalties for knowingly and intentionally adulterating, counterfeiting and/or forging drugs. An individual who knowingly and intentionally adulterates a drug in a manner that has reasonable probability of causing serious adverse health consequences or death shall be imprisoned for a maximum of 20 years and/or fined up to $1 million. Individuals who are convicted of knowingly and intentionally counterfeiting or forging drugs may also be imprisoned for up to 20 years and/or fined up to $4 million. The penalties for either violation are currently capped at up to three years of imprisonment and/or a $10,000 fine.

Extend market exclusivity for certain new antibiotics intended to treat serious or life-threatening infections by five years. Conditions identified as potentially serious or life-threatening include conditions caused by resistant gram-positive pathogens, multi-drug resistant gram negative bacteria, multi-drug resistant tuberculosis and C. difficile. Products intended to treat these conditions are also eligible for priority marketing application review.

Require manufacturers of certain drugs to notify the FDA at least six months before taking action that would result in a permanent discontinuance of the manufacture of a drug or an interruption of the manufacture of a drug that could lead to a meaningful disruption in overall drug supply. This requirement would apply to manufacturers of drugs that are life-supporting, life-sustaining, intended for use in the prevention of a debilitating disease or condition, a sterile injectable product, or used in emergency medical care or during surgery (excluding products that are radiopharmaceuticals, human tissue replaced by a recombinant product, a product derived from human plasma or any other product designated by the FDA).

Require the FDA to consider, before the issuance of enforcement action, the effect of such action on the availability of certain drugs. While the FDA often considers potential shortages when determining the extent or nature of enforcement action (e.g., in injunction actions), particularly for vaccines or sole source products, this provision would affirmatively require the FDA to consider the effect of any enforcement action or issuance of a warning letter that the FDA determines could “reasonably be anticipated to lead to a meaningful disruption” in the supply of certain drugs, e.g., drugs that are life-supporting, life-sustaining, intended for use in the treatment of a debilitating disease or condition, a sterile injectable product, or used in emergency medical care or during surgery (excluding products that are radiopharmaceuticals, human tissue replaced by a recombinant product, a product derived from human plasma or any other product designated by the FDA), in the United States. The FDA would be required to consult with an office of the FDA with expertise in drug shortages in making this determination.

Require the FDA to issue guidance describing its policy on the promotion of FDA-regulated products on the internet. Theguidance must be issued within two years after the date of enactment of the legislation. This provision would speed up the FDA’s development and issuance of guidance, and provide more clarity to the industry, on internet-related advertising, including through social media.

Provides that the elements to assure safe use in a risk evaluation and management strategy (REMS) may not be used to prohibit access to a drug or biological by a generic drug or biosimilar manufacturer. The bill states thatas part of each REMS program, the FDA shall require that the holder of an application for an innovator drug or biological not restrict the resale of the drug or biological to an eligible generic drug or biosimilar developer for the purpose of testing in support of a generic or biosimilar marketing application if the manufacturer of the innovator product receives written notice from the FDA.

Require the FDA to develop and implement strategies to solicit the views and perspectives of patients during product development and regulatory discussions. The bill identifies “fostering participation of a patient representative” to participate in agency meetings with clinical trial sponsors and investigators, and “exploring means to identify patient representatives who do not have any, or have minimal financial interest in the medical products industry” as methods for the FDA to facilitate public participation. This provision is consistent with developments in personalized medicine and risk-benefit analysis reforms to more expressly include patient views and patient risk tolerance in the review of data in support of marketing applications.

The Senate bill is also notable for its exclusion of several widely publicized proposed provisions, including proposals to allow United States citizens to import drugs from Canadian pharmacies; to revoke exclusive marketing rights from manufacturers found to be at fault for violations of the FDCA, the False Claims Act (e.g., off-label promotion) or the Anti-kickback Statute (among others); to discourage so-called “pay for delay” patent settlements that are purported to delay generic drugs from entering the market; and to limit enforcement relating to dietary supplements.

With the Senate’s vote, the Food and Drug Administration Safety and Innovation Act now moves to the House of Representatives, which has been working on its own version of a user fee bill. The House bill, which was recently reported from the House Energy and Commerce Committee, differs in some respects from the Senate bill described above, and thus, the chambers will likely iron out any differences between the two bills through a formal or informal “reconciliation process” prior to submitting a final bill for President Obama’s signature. Notwithstanding this remaining process, members of both chambers of Congress are aiming to have a final bill on the President’s desk by the first week of July—well before the FDA’s current authorization to charge user fees expires on September 30, 2012.

Implications

In a surprising show of bipartisan cooperation, the Senate’s nearly unanimous approval of the Food and Drug Administration Safety and Innovation Act is an important step toward ensuring the FDA has the financial resources it needs to continue to review marketing applications for FDA-regulated products. Because the majority of the funding required to review marketing applications comes from user fees, the agency’s inability to charge such fees would significantly inhibit its ability to review applications in a timely manner.

The nearly unanimous passage of the Senate bill and the absence of some of the more controversial provisions that had been under discussion, or proposed as amendments, signifies congressional and administration recognition of the importance of prompt review and approval of innovative and life-saving medical products for patients. In addition, the bipartisan passage of the bill represents acknowledgment that speedier review and approval of medical products provides incentive for investments in important medical research.

The full House of Representatives is expected to take up consideration of the House bill this week (week of May 28, 2012).